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The Honolulu Advertiser
Posted on: Monday, January 25, 2010

Lingle proposes business stimulation incentives

Advertiser Staff

Gov. Linda Lingle today called for a package of business incentives to help stimulate business, including aid to cover the costs of health insurance and income tax credits for the creation of new jobs.

In her eighth and final State of the State address, Lingle said “The income tax credit proposal grants credits equal to the wages withheld by the employer for each new, full-time permanent position filled by a resident who is currently receiving unemployed benefits.”

The tax credits will begin upon her signature and remain in effect through Dec. 31, 2012.

“Businesses will be required to be operational for two years after their final tax credits are received,” Lingle said.

Lingle also called for establishing a 10 percent construction and renovation tax credit for hotels and resorts as a means to help stimulate the economy.

The credit wil be granted for the first $500 million in construction that gets underway in each of the next three years and could help create more than 23,000 jobs, the governor said.

“The cost of the credit will be more than offset by the economic activity generated,” she said.

Lingle also proposed moderating increases in the unemployment insurance tax, allowing employers to pay only 60 percent of anticipated tax hikes. The plan would save businesses $497 million over the next four years.

Any beyond the 60 percent threshold will cause large job losses, the governor said.

On a separate issue, Lingle said she wants to “rename and revise” the state’s so-called Rainy Day Fund to create a Fiscal Stabilization Fund.

“This fund will shield us in future years from the need to raise taxes during periods when the economy is contracting and citizens can least afford to pay more,” Lingle said in her prepared text.

The governor urged lawmakers to be cautious and be fiscally austere as they deal with a $1 billion-plus budget deficit this session.

“The mid-term economic outlook requires that we further downsize government, prioritize the services we desire and can afford and together devise innovative ways to meet the needs of Hawai‘i’s people,” Lingle said.

However, she said, we must do what it takes to create a future that does not financially burden our children and grandchildren simply because we weren’t willing to make those difficult, sometimes gut-wrenching decisions, when destiny called on us to do so. Clinging to the programs, practices and government structure of the past will not work and cannot be sustained.”

Making a reference to the controversial decision to furlough public school teachers and eliminating instructional days last year, Lingle called for allowing the electorate to vote on a constitutional amendment that would make the Department of Education a cabinet department, and the superintendent an appointee of the governor.

“It is time for Hawai‘i to make the governor accountable for public education,” Lingle said. Currently, members of the Board of Education are elected. The board appoints the superintendent